The 'Superb' and the not so superb: Is Skoda ready to speed ahead?

Skoda SuperbSample this : How do you double the price of a Skoda? Fill it up with petrol. Why do Skodas have heated rear windows? To keep your hands warm while you’re pushing it.

There are many more such jokes, which have been part of urban folklore in Europe in the early days of Skoda’s existence, largely borne out of the Czech brand’s legacy as an East European tractor manufacturer.

Closer home, in India, the brand has been grappling with a different set of challenges – of making the Indian consumer appreciate and buy into the brand’s somewhat unique and recently found positioning of ‘value luxury’. That itself is a tough challenge for the brand in a crowded and competitive market with demanding customers who place a premium on aspects like cost of ownership, mileage, and the cost of maintenance, quite a few of which are perceived as Skoda’s weak points.

Even communicating an oxymoronic term like value-luxury sounds an onerous task. Explains Sudhir Rao – chairman and managing director, Skoda Auto India, “We have never assigned value from a communication perspective; the focus has always been on the features, technology, and luxury.” The value is something the customer figures out, he says. It is no secret that there have been enough brands that have been destroyed because they specifically assigned value over everything else.

According to Dhruv Chopra, chief marketing officer at CarWale, the leading automotive portal, “The ‘value luxury’ positioning should ideally work very well in a ‘value-conscious’ India, but it has been eroded with Skoda’s reputation of having high service and maintenance costs.” What happened over the years was that business practices of a few dealers started impacting the brand negatively, and the reputation of high ownership cost seemed to stick, he adds. This despite the fact that the Skoda Superb has been the leader in its class for several years now, routinely outselling all competing sedans (Accord, Camry, Passat) and by a significant margin, as per the industry estimates.

A Skoda user of many years and a largely happy one at that, Sourabh Mishra, chief strategy officer, Bates CHI & Partners, says, “I love the car but every time a little bulb blows up, the management of the service process strikes a discordant note in the total ownership experience. Skoda should perhaps have been positioned as a car (to be bought) for its driving experience, thus setting right expectations in its customers’ minds.” The product delivers but the experience doesn’t, especially for customer expectations shaped by Maruti ownership.

Something that the Skoda India leadership has been trying to address on a war-footing. It has introduced, for instance, an online service calculator that provides customers with transparency on costs for regular services, repairs and replacements. Claims Ashutosh Dixit — director, sales, service & marketing, Skoda Auto, “Service – Turn-around-Time (TAT) and Repeat Repairs cases across our dealers in India have come down significantly over the past two years.” The maintenance (for Skoda) is on the normal average level, but the issue arises when you start to compare us with Maruti, he adds. The experience of driving the next European brand that is being delivered at half or one third the cost is the story that needs to be told. What we have not done well is educating customers, he avers.

The Skoda dealer network globally is undergoing a make-over across all touch-points. While the look and feel has been made lighter, the retail environment is being completely built around the customer ground-up. By the end of the year, India will have 70 dealers for sales and another 75 for service, and out of these around 40 are soon to don the new look.

The other big challenge for Skoda has been to establish a presence in the high volume segments - namely hatchbacks and small-to-midsize sedans, where it tried to play with Fabia which was eventually retired and Rapid that continues to clock poor numbers as per industry estimates. An obvious question would be the weak play of the brand in the prolific entry-level mass-segment and is it part of a plan? Werner Eichhorn - member of the board, sales & marketing, Skoda Auto is very clear and says, “For now we do not have any play in the mass market. When India develops more in the direction of the European style – and safety standards go up then there might be an opportunity to have an entry car below Rapid.” (Read the Interview) Even then they do not have any plans to build budget cars, since Skoda is about high quality, safe cars, he adds. While European markets are highly safety conscious and willing to pay a premium for their ‘solid build quality’, Indian consumers are known mostly to gloss over the intrinsic values in a car and only focus on the price point and features.

Views Partha Sinha, vice chairman and managing director, McCann Worldgroup, “The truth about this market is a little different and that’s where the European brands find it difficult. The market doesn’t care much about safety (seen any Indian using seat belts in the rear seat? Not even children!), or build quality or engineering excellence.” The Korean and Japanese brands jumped into this with their eyes open and kept giving bigger looking and underpowered cars at affordable prices and the market lapped them up, he adds. Along with these set of issues, which are specific to the Indian marketplace, there are some other inherent challenges.

When launched in 2002, Skoda led the European premium car presence in India. This premium positioning of Skoda is a phenomenon, unique to India, largely because it was the first car to be launched from the VW group and ended up taking pole position. VW launched in India much later in 2007. In its home market Europe, the VW brand is considered more premium, and Skoda its cheaper cousin. It is only in India that Skoda is equal to or more premium than VW, is a large part of the problem for the Czech brand. A former marketer very closely associated with the brand shares on condition of anonymity, “It was actually VW’s entry into India that created the biggest problem for Skoda in India, and it was dumbed down deliberately.” He puts it as a classic case of a portfolio strategy gone totally wrong where one brand has been deliberately stunted in-house, to give preference to the other, and in the end, neither have benefitted greatly. A query about the gameplan vis a vis VW, and whether Skoda was being positioned a notch below VW, was evaded by the Skoda team.

Majority of the challenges on Skoda’s plate are pretty much the challenges of most European brands trying to find their footprint in India. These huge behemoth international brands like VW, Renault-Nissan, GM, Ford and even Fiat are all burning the midnight oil furiously to figure out their India blueprint for what will eventually be one of the world’s largest car markets.